An In-depth Review of the Company's Dividend Performance and Sustainability
Enterprise Products Partners LP (EPD, Financial) recently announced a dividend of $0.5 per share, payable on 2023-11-14, with the ex-dividend date set for 2023-10-30. As investors eagerly anticipate this upcoming payment, it is crucial to examine the company's dividend history, yield, and growth rates. This analysis, supported by data from GuruFocus, provides insights into Enterprise Products Partners LP's dividend performance and its sustainability.
What Does Enterprise Products Partners LP Do?
Enterprise Products Partners is a master limited partnership that transports and processes natural gas, natural gas liquids, crude oil, refined products, and petrochemicals. It is one of the largest midstream companies, with operations servicing most producing regions in the Lower 48 states. Enterprise is particularly dominant in the NGL market and is one of the few MLPs that provide midstream services across the full hydrocarbon value chain.
A Glimpse at Enterprise Products Partners LP's Dividend History
Enterprise Products Partners LP has maintained a consistent dividend payment record since 1998. Dividends are currently distributed on a quarterly basis. Enterprise Products Partners LP has increased its dividend each year since 1998, earning it the title of a dividend aristocrat, a distinction given to companies that have consistently increased their dividend each year for at least the past 25 years.
Breaking Down Enterprise Products Partners LP's Dividend Yield and Growth
As of today, Enterprise Products Partners LP currently has a 12-month trailing dividend yield of 7.22% and a 12-month forward dividend yield of 7.39%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Enterprise Products Partners LP's annual dividend growth rate was 2.30%. Extended to a five-year horizon, this rate decreased to 2.20% per year. Over the past decade, Enterprise Products Partners LP's annual dividends per share growth rate stands at 3.90%.
Based on Enterprise Products Partners LP's dividend yield and five-year growth rate, the 5-year yield on cost of Enterprise Products Partners LP stock as of today is approximately 8.05%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, Enterprise Products Partners LP's dividend payout ratio is 0.78. This may suggest that the company's dividend may not be sustainable.
Enterprise Products Partners LP's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Enterprise Products Partners LP's profitability 8 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each of the years over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
For the sustainability of dividends, a company must have robust growth metrics. Enterprise Products Partners LP's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Enterprise Products Partners LP's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Enterprise Products Partners LP's revenue has increased by approximately 21.10% per year on average, a rate that outperforms approximately 71.87% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Enterprise Products Partners LP's earnings increased by approximately 6.20% per year on average, a rate that outperforms approximately 35.09% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 10.10%, outperforms approximately 47.07% of global competitors.
Conclusion
Given the consistent dividend payments, impressive growth rate, and strong profitability, Enterprise Products Partners LP presents an intriguing prospect for value investors. However, the sustainability of its dividends is contingent on its payout ratio, which is currently high. Despite this, the company's robust growth metrics and profitability rank signal a promising future. Investors should closely monitor these factors to make informed decisions.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
